8th July 2016

BBA Brief – 8 July 2016

US investment banks show support for London

Following the UK’s vote to leave the European Union, five top US investment banks have said they will “keep working to promote London and its position as a leading financial centre,” (Telegraph b1). The banks – which include Goldman Sachs, Morgan Stanley and J.P. Morgan – made the joint statement with Chancellor George Osborne following a meeting on Thursday. Reuters referred to the legacy of London’s established financial sector, but added that banks “made no commitment” about keeping jobs in Britain.

May and Leadsom in final round of leadership race

After the second MPs’ ballot for the Conservative leadership, Home Secretary Theresa May and Energy Minister Andrea Leadsom are the final two candidates in the running (Guardian p1). The vote, which was announced yesterday evening, means the UK will have its first female Prime Minister since Margaret Thatcher. The Telegraph (p1) reported that Leadsom is likely to attract Eurosceptic activists who want a “Brexit Prime Minister,” whilst the Times (p1) reported that May, who was backed by 199 MPs, has support from “left and right, leavers and remainers”.

Italian banks facing turmoil

The New York Times reports that Italian banks are “spreading fear through global financial markets,” as they’re faced with non-performing loan portfolios, estimated to be around €360 billion – the equivalent of a fifth of the country’s GDP. The Wall Street Journal suggests the crisis is due to “clubby” relationships with regulators and politicians who’ve shielded against “takeovers, competition, layoffs or consolidation,” and that attempts to improve this have been “half-hearted.” The FT (online only) suggests the UK’s decision to leave the EU has exacerbated Italy’s problem, having “pushed equity and bond prices even lower.”

Latest from the BBA

Read BBA Chief Executive Anthony Browne’s newsletter on the EU referendum vote, the BBA’s Retail Banking Conference and Andrew Bailey taking the reins at the FCA.

On the 12th September, BBA will be running a one day training workshop on the ‘Introduction to the Role of the MLRO’ for more details click here.

The BBA’s 14th annual Financial Crime and Sanctions Conference will be taking place on the 20th and 21st September. Visit our website to view the conference programme, confirmed speakers and to book your place.

Latest from our sponsor Jaywing

Jaywing’s Data Management Practice Director, Inderjit Mund, blogs about the role of data management when it comes to regulatory compliance.

Today’s diary

ONS: UK productivity statistics Q1 2016

ONS: UK trade statistics May 2016

HMRC: Overseas Trade Statistics May 2016

REC/KPMG: jobs report  June 2016

NATO: summit begins

Stat of the day

€360 billion – Italian banks’ current non-performing loan portfolios

In brief

Chair of the Swiss Bankers’ Association, Patrick Odier, has said Switzerland, London, Hong Kong and Singapore should form an “F4” alliance following the British vote last month to leave the EU, reports the FT (b21).

Chair of the Treasury Select Committee, Andrew Tyrie, has written to 13 retail banks over charges to customers’ personal accounts, particularly in relation to overdrafts (City AM paper only).

The FT (online only) features a report from think-tank, Centre for Cities, which suggests London provides 30 per cent of the UK’s main taxes. It reports taxes fell in other major cities including Birmingham, Glasgow and Leeds.

Following the UK’s vote to leave the EU, the Telegraph (online only) reports that banks, house-builders and insurers now offer the highest potential dividend yields among large UK companies.

A top sovereign debt agency, Fitch, has predicted this year will see more downgrades to government credit ratings than ever before, reports City AM (p5).

Home owners can cash in on record-low interest rates as borrowing costs fall, reports the Times (p8). It says hundreds of thousands of existing borrowers with mortgages linked to base rate will see the cost of their monthly re-payments fall, if the Bank of England decides to cut interest rates in next Thursday’s Monetary Policy Committee meeting.

What the commentators say
Gillian Tett writes in the FT (p13) suggesting the UK is unlikely to be able to rely on overseas trade to overcome the negative economic impacts of the vote leave decision.

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